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EFFECT OF PERSONALIZED PRICE ON DECISION MAKING PROCESS ON INTERNET

Year 2012, Volume: 26 Issue: 1, 133 - 146, 08.02.2012

Abstract

The article addresses the personalized price offer, a variable that may have a significant influence on decision making, within the scope of consideration set theory. Specifically, it aims to investigate the cause and effect relationship between presence of personalized price offer and decision making process on the Internet. A field experiment is conducted on retailing Web site of a leading mobile phone distributor in Turkey. Data is analyzed with Pearson chi-square and logistic regression analysis. It was found that, whereas the presence of personalized price offer increases the chance for a product to be included in consideration set and selected as final choice, no significant relationship is found between the presence of a personalized price offer and the inclusion of the product in customer’s choice set. Findings were similar for the consumers who are on different stages of decision making.

References

  • Andrews, R.L., Srinivasan, T.C. (1995), “Studying Consideration Effects in Empirical Choice Models Using Scanner Panel Data”, Journal of Marketing Research, 32, pp.30-41.
  • Chang, K. (1998), “Essays on Heterogeneity in Choice Modeling”, Unpublished Doctoral Dissertation, The University of British Columbia.
  • Churchill, G.A., Jr. (1991). Marketing Research: Methodological Foundations. 5th ed., Orlando: The Dryden Press Int. Edt.
  • Coates, S.L., Butler, L.T. and Berry, D. C. (2004), “Implicit Memory: A Prime Example for Brand Consideration and Choice”, Applied Cognitive Psychology, 18, pp.1195–1211.
  • Dhar, R. (1996), “The Effect of Decision Strategy on the Decision to Defer Choice”, Journal of Behavioral Decision Making, 9, 4, pp.265–81.
  • Gensch, D.H. (1987), “A Two-Stage Disaggregate Attribute Choice Model”, Marketing Science, 6, 3, pp.223-231.
  • Gronhaug, K. (1973), “Some Factors Influencing the Size of the Buyer’s Evoked Set”, European Journal of Marketing, 7, pp.232-241.
  • Gruca, T.S. (1989), “Determinants of Choice Set Size: An Alternative Method for Measuring Evoked Sets”, Advances in Consumer Research, 16, pp.515-521.
  • Hauser, J.R., Wernerfelt, B. (1990), “An Evaluation Cost Model of Consideration Sets”, Journal of Consumer Research, 16 (March), pp.393-408.
  • Huber, J., Payne, J.W. and Puto, C. (1982), “Adding Asymmetrically Dominated Alternatives: Violations of Regularity and the Similarity Hypothesis”, Journal of Consumer Research, 9 (June), pp.90–98.
  • Iyengar, S.S., Lepper, M.L. (2000), “When Choice is Demotivating: Can One Desire Too Much of a Good Thing?”, Journal of Personality and Social Psychology, 79 (December), pp.995–1006.
  • Johnson, E.J., Payne, J.W. (1985), “Effort and Accuracy in Choice”, Management Science, 31 (April), pp.395-414.
  • Kumar, P. (1997), “Dynamic Hierarchical Bayesian Models of Consideration and Choice- Issues and Estimation”, Unpublished Doctoral Dissertation, State University of New York, Buffalo.
  • Mitra, A., Lynch, J.G. Jr. (1995), “Toward a Reconciliation of Market Power and Information Theories of Advertising Effects on Price Elasticity”, Journal of Consumer Research, 21, 4, pp.644-659.
  • Murthi, B.P.S., Sarkar, S. (2003), “The Role of the Management Sciences in Research on Personalization”, Management Science, 49, pp.1344- 1362.
  • Peppers, D., Rogers, M. (1997), Enterprise One-to-one: Tools for Competing in the Interactive Age. New York: Doubleday.
  • Personalization Consortium (2005), 2 August, available at: www.personalization.org/personalization.html (Retrieved - 2010.08.23)
  • Ratchford, B.T. (1982), “Cost-Benefit Models for Explaining Consumer Choice and Information Seeking Behavior”, Management Science, 28, 2, pp.197-212.
  • Roberts, J. (1989), “A Grounded Model of Consideration Set Size and Composition”, Advances in Consumer Research, 16, pp.749-757.
  • Roberts, J.H., Lattin, J.M. (1991), “Development and Testing of a Model of Consideration Set Composition”, Journal of Marketing Research, 28 (November), pp.429-440.
  • Sheth, J.N. (1968), Perceived Risk and Diffusion of Innovations in Insigth into Consumer Behavior, J. Arndt ed., Boston, Massachusetts: Allyn and Bacon Inc.
  • Shocker, A.D., Ben-Akiva, M., Boccaro, B. and Nedungadi, P. (1991), “Consideration Set Influences on Consumer Decision-Making and Choice: Issues, Models and Suggestions”, Marketing Letters, 2, 3, pp.181-197.
  • Shugan, S.M. (1980), “The Cost of Thinking”, Journal of Consumer Research, 7(2), pp.99-111.
  • Simonson, I. (2005), “Determinants of Customer Responses to Customized Offers: Conceptual Framework and Research Propositions”, Journal of Marketing, 69, pp.32-45.
  • _____, Tversky, A. (1992), “Choice in Context: Tradeoff Contrast and Extremeness Aversion”, Journal of Marketing Research, 29 (August), pp.281–96.
  • Stigler, G.J. (1961), “The Economics of Information”, Journal of Political Economy, 69, 3, pp.213-225.
  • Tversky, A., Shafir, E. (1992), “Choice Under Conflict: The Dynamics of Deferred Decision”, Psychological Science, 3, 6, pp.358–361.
  • Vesanen, J. (2007), “What is Personalization? A Conceptual Framework”, European Journal of Marketing, 41, 5/6, pp.409-418.

EFFECT OF PERSONALIZED PRICE ON DECISION MAKING PROCESS ON INTERNET

Year 2012, Volume: 26 Issue: 1, 133 - 146, 08.02.2012

Abstract

The article addresses the personalized price offer, a variable that may have a significant influence on decision making, within the scope of consideration set theory. Specifically, it aims to investigate the cause and effect relationship between presence of personalized price offer and decision making process on the Internet. A field experiment is conducted on retailing Web site of a leading mobile phone distributor in Turkey. Data is analyzed with Pearson chi-square and logistic regression analysis. It was found that, whereas the presence of personalized price offer increases the chance for a product to be included in consideration set and selected as final choice, no significant relationship is found between the presence of a personalized price offer and the inclusion of the product in customer’s choice set. Findings were similar for the consumers who are on different stages of decision making.

References

  • Andrews, R.L., Srinivasan, T.C. (1995), “Studying Consideration Effects in Empirical Choice Models Using Scanner Panel Data”, Journal of Marketing Research, 32, pp.30-41.
  • Chang, K. (1998), “Essays on Heterogeneity in Choice Modeling”, Unpublished Doctoral Dissertation, The University of British Columbia.
  • Churchill, G.A., Jr. (1991). Marketing Research: Methodological Foundations. 5th ed., Orlando: The Dryden Press Int. Edt.
  • Coates, S.L., Butler, L.T. and Berry, D. C. (2004), “Implicit Memory: A Prime Example for Brand Consideration and Choice”, Applied Cognitive Psychology, 18, pp.1195–1211.
  • Dhar, R. (1996), “The Effect of Decision Strategy on the Decision to Defer Choice”, Journal of Behavioral Decision Making, 9, 4, pp.265–81.
  • Gensch, D.H. (1987), “A Two-Stage Disaggregate Attribute Choice Model”, Marketing Science, 6, 3, pp.223-231.
  • Gronhaug, K. (1973), “Some Factors Influencing the Size of the Buyer’s Evoked Set”, European Journal of Marketing, 7, pp.232-241.
  • Gruca, T.S. (1989), “Determinants of Choice Set Size: An Alternative Method for Measuring Evoked Sets”, Advances in Consumer Research, 16, pp.515-521.
  • Hauser, J.R., Wernerfelt, B. (1990), “An Evaluation Cost Model of Consideration Sets”, Journal of Consumer Research, 16 (March), pp.393-408.
  • Huber, J., Payne, J.W. and Puto, C. (1982), “Adding Asymmetrically Dominated Alternatives: Violations of Regularity and the Similarity Hypothesis”, Journal of Consumer Research, 9 (June), pp.90–98.
  • Iyengar, S.S., Lepper, M.L. (2000), “When Choice is Demotivating: Can One Desire Too Much of a Good Thing?”, Journal of Personality and Social Psychology, 79 (December), pp.995–1006.
  • Johnson, E.J., Payne, J.W. (1985), “Effort and Accuracy in Choice”, Management Science, 31 (April), pp.395-414.
  • Kumar, P. (1997), “Dynamic Hierarchical Bayesian Models of Consideration and Choice- Issues and Estimation”, Unpublished Doctoral Dissertation, State University of New York, Buffalo.
  • Mitra, A., Lynch, J.G. Jr. (1995), “Toward a Reconciliation of Market Power and Information Theories of Advertising Effects on Price Elasticity”, Journal of Consumer Research, 21, 4, pp.644-659.
  • Murthi, B.P.S., Sarkar, S. (2003), “The Role of the Management Sciences in Research on Personalization”, Management Science, 49, pp.1344- 1362.
  • Peppers, D., Rogers, M. (1997), Enterprise One-to-one: Tools for Competing in the Interactive Age. New York: Doubleday.
  • Personalization Consortium (2005), 2 August, available at: www.personalization.org/personalization.html (Retrieved - 2010.08.23)
  • Ratchford, B.T. (1982), “Cost-Benefit Models for Explaining Consumer Choice and Information Seeking Behavior”, Management Science, 28, 2, pp.197-212.
  • Roberts, J. (1989), “A Grounded Model of Consideration Set Size and Composition”, Advances in Consumer Research, 16, pp.749-757.
  • Roberts, J.H., Lattin, J.M. (1991), “Development and Testing of a Model of Consideration Set Composition”, Journal of Marketing Research, 28 (November), pp.429-440.
  • Sheth, J.N. (1968), Perceived Risk and Diffusion of Innovations in Insigth into Consumer Behavior, J. Arndt ed., Boston, Massachusetts: Allyn and Bacon Inc.
  • Shocker, A.D., Ben-Akiva, M., Boccaro, B. and Nedungadi, P. (1991), “Consideration Set Influences on Consumer Decision-Making and Choice: Issues, Models and Suggestions”, Marketing Letters, 2, 3, pp.181-197.
  • Shugan, S.M. (1980), “The Cost of Thinking”, Journal of Consumer Research, 7(2), pp.99-111.
  • Simonson, I. (2005), “Determinants of Customer Responses to Customized Offers: Conceptual Framework and Research Propositions”, Journal of Marketing, 69, pp.32-45.
  • _____, Tversky, A. (1992), “Choice in Context: Tradeoff Contrast and Extremeness Aversion”, Journal of Marketing Research, 29 (August), pp.281–96.
  • Stigler, G.J. (1961), “The Economics of Information”, Journal of Political Economy, 69, 3, pp.213-225.
  • Tversky, A., Shafir, E. (1992), “Choice Under Conflict: The Dynamics of Deferred Decision”, Psychological Science, 3, 6, pp.358–361.
  • Vesanen, J. (2007), “What is Personalization? A Conceptual Framework”, European Journal of Marketing, 41, 5/6, pp.409-418.
There are 28 citations in total.

Details

Primary Language English
Journal Section Makaleler
Authors

Aysegül Sağkaya Güngör

Aysegul Sagkaya Gungor

İsmail Kaya This is me

Publication Date February 8, 2012
Published in Issue Year 2012 Volume: 26 Issue: 1

Cite

APA Sağkaya Güngör, A., Sagkaya Gungor, A., & Kaya, İ. (2012). EFFECT OF PERSONALIZED PRICE ON DECISION MAKING PROCESS ON INTERNET. Atatürk Üniversitesi İktisadi Ve İdari Bilimler Dergisi, 26(1), 133-146.

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